Errors and Omissions ( e&o ) Insurance
If you're ever confronted with potentially catastrophic litigation, your company's survival and your own financial security could depend on whether or not you have Errors and Omissions ( E&O ) Insurance coverage.
Keep on reading below for all the information you need for your e&o needs. Alternatively, you can see how much E&O insurance costs by going to our e&o insurance cost page and learning about the costs associated with e&o insurance
What Is Errors and Omissions ( e&o ) Insurance?
Errors and Omissions ( e & o ) insurance, also known as Professional Liability insurance, is a fundamental safeguard for your IT business. In addition to protecting your technology business if a client claims you were professionally negligent, Errors & Omissions (e & o) Insurance protects you in case of potentially costly allegations that your company failed to perform professional duties.
It does this by making payments to cover...
- Lawyer’s costs: Whether or not the claims against you have merit, you will be required to defend yourself, either through out-of-court negotiations or through a trial. In either case, you will need an attorney to prepare necessary documents, construct a defense, and argue your case in the appropriate forum.
- Court costs: If your case proceeds to trial, you will be responsible for court costs that might include expert witness fees, transcript fees, docket fees, and more. Depending on the resources your case requires, court costs can add up quickly.
- Settlements, judgments, and fines: These costs include the "award" amounts often referred to in news stories. This amount is designed to reflect the monetary amount attributed to the damages associated with the alleged incident that sparked the lawsuit.
It’s important to note, however, that your Errors and Omissions Insurance covers all these costs up to a certain limit, as designated by your policy. For this reason, it is crucial to make sure you carry adequate E&O coverage for the kind of work you do.
Why Do I Need Errors and Omissions Insurance?
Errors and Omissions ( e&o ) Insurance protects your technology company from professional liability risks that can cost more than you have in your company bank account and tie up your human resources for years.
Your small technology business may be as vulnerable to E&O lawsuits as a massive software giant or multinational hardware producer. From catastrophic software crashes to network failures that shut down a client company’s business for hours, unexpected technology failures or all-too-human oversights can result in a lawsuit.
If you’re sued, you don’t want to be without Errors and Omissions Insurance. Why? Because E & O protects you and your business from the potentially disastrous expenses of fighting your case in court. Without Errors and Omissions Insurance, the cost of a legal defense could put you out of business.
Here are three top reasons IT professionals purchase E & O Insurance:
- Many clients require E&O Insurance. Often, clients seeking to work with tech companies or independent contractors will not sign a contract unless the latter has E&O Insurance in place. When this is the case, E&O coverage is a prerequisite for obtaining work.
- You could be sued as part of a larger lawsuit. Even if you worked only on a small part of a much larger project (for example, as an independent consultant or contractor with a firm hired by a third party), you could face a lawsuit from a disgruntled client with whom you may never have had direct contact. That person’s attorneys are likely to name in a lawsuit every firm and contractor involved in the project in question, regardless of how big a role each played in completing the work or causing the damage.
- You could face legal action months or years after completing a project.: Statutes of limitations for errors and omissions claims vary by state. Depending on where you live, you could face a lawsuit well after you’ve put a project to bed. What’s more, many E&O policies work on a “claims-made” basis, meaning they only offer coverage if the insured party carried insurance during the time he or she completed the work in question AND at the time when the lawsuit was initiated.
Protect Yourself Now from Legal Unknowns
Errors and Omissions ( e & o ) Insurance is particularly important for technology professionals because their industry is still relatively new. There are few established precedents for computer consulting and contracting law, and as more cases wind their way through the courts, tort laws governing technology contracts continue to evolve.
Courts are still defining the various types of computer professionals and the expectations related to technology services and contracts. What may not be actionable today could result in huge court awards next year. Errors and Omissions Insurance protects you from new legal threats, so you never have to worry that work you do today could result in a devastating lawsuit months from now, depending on the statutes of limitations where you live.
Some of your clients may require that you and your subcontractors carry Errors and Omissions Insurance. Many computer consulting companies also require their subcontractors (generally those workers receiving a 1099 instead of a W-2 at the end of the year) to carry Errors and Omissions Insurance. If a client sues the technology firm for a perceived error or omission, even if the problem occurs months after the initial consulting activities, both the consulting firm and subcontractors can be held liable.
The right kind of Errors and Omissions Insurance can protect both parties by providing financial coverage for lawyer’s fees, court costs, judgments, settlements, and fines, up to a policy’s limits. One benefit of E&O Insurance is that it offers payouts whether or not your company is actually at fault: in other words, if you truly did make a mistake or perform negligent work, your Errors and Omissions ( E&O ) policy is effective, and if the claim against you is frivolous or unfounded, you are also covered.
If, as you read this and learn the significant risks of working without adequate E&O Insurance and want to obtain this coverage immediately for your business, don’t worry: you can receive a Certificate of Liability Insurance for an errors and omissions policy quickly and easily by completing our online application process.
Tailor Your Errors and Omissions Coverage To Fit Your Business
Tech Insurance will work with you to provide you with an Errors and Omissions Insurance cost quote tailored to your technology firm’s needs. For example, you can adjust your Errors and Omissions coverage based on:
- Persons covered
- Professional responsibilities
- Other information pertinent to your technology business
By the time you face your first lawsuit, it will be too late. Don’t take the risk – protect your company now from known and unknown legal dangers with Errors and Omissions insurance from TechInsurance.
Compare Errors and Omissions ( e & o )Insurance Costs and Quotes
Ready to compare the cost of Errors and Omissions Insurance coverage from top carriers? Fill out this online application, and receive E & O Insurance quotes from ACE, Hiscox, and five other leading providers in a matter of minutes.